William Plovanic – Canaccord Genuity Matt Hewitt – Craig-Hallum Capital Bruce Jackson – Lake Street Capital Markets Mike Matson – Needham and Company Suraj Kalia – Northland Securities James Terwilliger – Newport Coast Securities

Good day, ladies and gentlemen and welcome to the MiMedx Group Incorporated Q3 2014 Quarterly Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions) I’d now like to turn this conference call to Thornton Kuntz, Senior Vice President, Administration. You may begin.

Thank you, Kevin. Good morning everyone. This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based upon current beliefs and expectations of our management and are subject to risks and uncertainties. Actual results may differ materially from those set forth in, contemplated by, or underlying the forward-looking statements based on factors described in this conference call and in our reports filed with Securities and Exchange Commission including our Form 10-K for the year-ended December 31, 2013 and our most recent 10-Q. We do not undertake to update or revise any forward-looking statements, except as may be required by the Company’s disclosure obligations in filings it makes with the Securities and Exchange Commission under Federal Securities laws. With that, I’ll turn the call over to Pete Petit, MiMedx’s Chairman and CEO.

Thank you, Thornton. Good morning. We appreciate you joining us for our third quarter shareholder call. I have with me today Bill Taylor, our President and Chief Operating Officer; and Mike Senken, our Chief Financial Officer. There are also some other corporate executives with us. I’ll begin by stating that I classify this as an excellent quarter. We significantly achieved the goals – exceeded the goals that we’d set. I’m going to go ahead and highlight a few achievements that I consider very significant. We had our first quarterly operating profit and it was 11% of revenues. That’s probably more than was expected. We had 11th consecutive quarter of positive adjusted EBITDA, which to me, is a key metric for any corporate entity today because the accounting rules have gotten so complicated that if you don’t focus on adjusted EBITDA, you can miss a lot of progress the company is making. Cash flow from operating activities grew to 8.5 million, considerable achievement and as we all know cash is king, so our Chief Financial Officer is ecstatic. Wound Care sales grew about 184%, very significant because of course that’s where our focus has been. It’s our 12th consecutive quarter, meeting or exceeding revenue guidance. That’s becoming routine and hope we’ll continue that. Another significant issue accounting wise is our day sales outstanding and accounts receivable decreased significantly from 72 days down to 63 days. That clearly demonstrates our product is efficiently flowing through our channels and there is no overstocking because people are paying in a timely way. Also it is a credit to our accounting department and their collection activities. Finally, our VA, our federal sales grew 20% quarter-over-quarter. That should certainly dispell any miss that we’re going to lose market share et cetera, et cetera. Now I mentioned…

Thanks, Pete. Good morning, everyone. Our momentum continues as was evidenced by our very strong third quarter both in terms of revenue growth as well as bottom line growth. It was an excellent quarter on all fronts. The new sales personnel that we bought in early in the year have been stepping up and delivering as we anticipated. We had strong growth in commercial Wound Care as well as strong growth in federal sales, the group of sales professionals we bought in late first quarter have generally ramped up strong and our recent hires in the third quarter have started quickly. We continue to make progress in many other areas such as commercial EpiFix coverage with multiple new plans covering EpiFix including Cigna and we progress several clinical studies forward with one very strong multi-center DFU trial that we expect would be published in the next few weeks. I go into more of the detail in several of these areas starting now with sales. Like last quarter, I want to highlight our quarter-over-quarter sales growth. We had an incremental $7.9 million in growth quarter-over-quarter, which is more than our entire revenue just eight quarters ago. This is a testament to our technology and team because believe me, this kind of growth is not easy. In terms of new sales hires we’ve increased from about a 128 at the time of our Q2 shareholder call to up over a 150 today and we are on track to be at a 160 or more in our field sales organization by year end. Most of these new additions have been targeted and are in the process of being hired. The vast majority of the sales reps hired earlier this year are focused on Wound Care. Now many of the new hires we are…

Thanks, Bill. Well, it’s Mike’s turn.

Thanks, Pete. The company recorded revenues for the third quarter of approximately $33.5 million, an increase of 108% or $17.4 million over prior year third quarter revenue of $16.1 million. On a market segment basis Wound Care revenue was $26 million, which represents a 184% increase over prior year and 26% sequential growth. Growth was driven by market share gains as well as increased revenue to existing accounts. Surgical, Sports Medicine and OEM revenue was $7.5 million, which represents an 8% increase over prior year and 52% sequential growth. Please remember that year-over-year comparisons will be impacted slightly by the inclusion of total micronized revenue in 2013 in the Surgical, Sports Medicine and OEM segment, whereas in 2014, EpiFix micronized revenue was included in Wound Care and AmnioFix micronized revenue was included in Surgical, Sports Medicine and OEM revenue. On a customer segment basis, commercial revenue was $22.7 million, which represents a 232% increase over prior year and 37% sequential growth. Federal revenue was $10.8 million, which is a 17% increase over prior year and 20% sequential growth. Growth was driven by penetration into new accounts as well as increased sales at existing accounts in both customer segment. For the nine months ended September 30, 2014, we reported revenue of $78.7 million, which is a 91% increase over prior revenue of $41.2 million. On a market segment basis, Wound Care revenue was $61.3 million, which represents a 170% increase over prior year. Surgical, Sports Medicine and OEM revenue was $17.3 million, which is a decrease of 6% as compared to prior year. The decrease is due to the previously mentioned micronized revenue reporting change. On a customer segment basis year-to-date commercial revenue was $49.7 million, which represents a 206% increase over prior year. Federal revenue was $29 million, which represents…

Thank you, Mike. Just prior to the call beginning, I was reviewing some of the reimbursement information and I think it might be pertinent to mention it to you. We’ve already disclosed our belief that we have commercial health plans of (indiscernible) over a 100 million nationally and reviewing the progress we are making on some other activities I would say that we have the potential to double that in the next couple of quarters. So we are very focused on the reimbursement piece of this business and I’ve told you at the analyst meeting, how complex it is, but we’ve been very successful in bringing over a 100 million covered last in the commercial side and expect – perhaps believe to be able to double that in the next couple of quarters. Let’s roll the call open to questions.

(Operator Instructions) Our first question comes from William Plovanic with Canaccord Genuity.

Thank you, good morning. Can you hear me okay?

We can, Bill.

Good. So my first question is very strong quarter you already preannounced this, but the surgical sports medicine and other business was up 50% sequentially, that was a pretty big number, some of the questions we’ve gotten is, is that related to Medtronic or Zimmer already stocking in or how would you characterize the sales, kind of what drove that – such a big jump sequentially?

Yeah, that was very little from that. We have not started shipping Zimmer yet. So it’s really more of timing with these distributors and just the way flow it over the quarters, not really much other than that. Mike, do you have anything to add?

Yeah, I think we’ve mentioned on prior calls that in terms of our mix, if you go back to the first couple of quarters, the distributor revenue was lower on a percentage basis than what we had seen coming out of 2013 and it’s picked up again a bit in the third quarter.

And then when would you expect to see Zimmer start contributing in Medtronic in a meaningful fashion?

Great, that’s helpful. And then the gross margins you’re guiding to a mid-80s, yet you just put up a 90% gross margin. I am trying to kind of understand what’s going to cause literally a five point drop in margins, why would that happen.

(indiscernible)

If this mix of the business stays the same, is there any reason to believe that margins would not stay at current levels, is there – does the pricing changes or extra unit sizes you are putting into place for 2015 have a significant impact on your gross margins?

Bill, maybe I can add something to that, we haven’t given the detailed breakdown on the growth for next year. We have alluded to the fact that we’re moving into some other surgical indication, those would have a different margin profile than Wound Care and Wound Care from a direct sales model perspective. But as Pete mentioned, it’s this stage as we are still flushing that out, we thought we would take the conservative route and keep it in the mid-80s.

Okay, and last question and then I’ll jump back into queue. As we look at the 2015 guidance, what are you contemplating for Zimmer and Medtronic in that guidance?

Bill, be patient here till mid-December I will give a significant detail at that time, but at this point, I don’t think we’re ready to give specifics there.

I mean recognize Bill, we’re also gathering more information from those two entities and there are meetings coming up between now and the end of the year that will give us a better feel for what is a realistic target there. As we said in the Analyst Day, we took a very conservative approach in coming up with the guidance of 175 to 185, but that’s one of the areas that we’ll refine when we get to mid-December.

Great, I’ll jump back in the queue, thank you.

Thank Bill.

Thank Bill.

And next question comes from Mike Matson with Needham & Company. Mike Matson - Needham & Company LLC: Hi thanks for taking my questions. I guess the cash flow was just outstanding this quarter, so it’s a good problem to have, but I am just wondering where do you expect that to pull the cash, I noticed you did it buyback some more stock in the quarter, so what’s left under that authorization and do you expect to continue to buy back stock depending – obviously depending on the stock price, but?

Mike, yes we still have, I think about 4 million and we discuss that at 4 million yesterday left that propose buyback. We just at the stage where the company will continue to build cash, we’re not at being really inquisitive with other opportunities. We’ve got a great platform here and we’re very busy building it. But that’s one question we really can’t answer very effectively because – and it’s a good problem to have but we don’t have a total solution for it. Mike Matson - Needham & Company LLC: Okay, and then Organogenesis, I mean you’ve talked about them struggling, but I guess just wondering what do you think the impact would be if they did manage to launch smaller sizes of their product? And then to what degree would something like that be sort of reflected in the guidance. If it happen next year, do you think that’s accounted for in your guidance?

Well, I’ve said publically at times that that was a solution to their problems, but I’m not sure if that’s in their plans. But anyway the longer this goes on, the harder it’s going to be for them to recover, that’s pretty evident and that’s just to do all the] business. Our (indiscernible) are much more clinically effective, they are much more cost effective, extremely cost effective relative to the (indiscernible) product because of the wastage factors. So even if they produce the smaller one, then that will change some of that dramatically but it will probably also affect their gross profit margins.

And there is huge logistics advantages too for our products compared to those even if they do have a smaller size, on demographic, we still have the (indiscernible) reserved product with a six month self life or whatever and the (indiscernible) products a couple of weak self life and then narrow temperature range needs to be used or it’s very easy to apply. As Pete mentioned that better clinical and cost effective results.

And again I have said previously numerous times that 10 years ago they contributed immensely to advanced wound care and taken it from where it was to where it was for last decade, but the product is old technology and it’s not as efficient and certainly nowhere near as cost effective. So things are going to play out, I am afraid pretty much as I have this year for them, but -- Mike Matson - Needham & Company LLC: But as – just hypothetically see where to launch the smaller sizes the next year, I mean do you think that’s – would that be a risk to your ability to hit your guidance or just the impact wouldn’t be that. I mean know your guidance is obviously very conservative, but do you think it’s conservative enough to count for something like that?

No, I think by the time they would bring a product to market, we will have had our foot print in every major and middle sized market out there and sessions officers where they have had some strength and I don’t think people will turn away from our product to start using their product again that’s – my business instincts tell me that. Mike Matson - Needham & Company LLC: Okay, and then just with the Medtronic deal, I was wondering is there discussions with any of the other – that’s limited to spine I guess, so have you had discussions with any of their other segments? And then I guess since they’re doing this deal of Covidien, have you had any discussions with Covidien because they are in a lot of surgeries as well I guess, so?

I don’t think it’s appropriate to comment on that, but we have a great respect for Medtronic as a entity and their people. It (indiscernible) me, but I haven’t gone a college with Bill George, of course it dates Bill too and he is retired and I also know the previous CEO, so we do know Medtronic well I think and we’ve got a nice relationship developing. Mike Matson - Needham & Company LLC: Alright and then just one final question, Michael you gave the inventory increase I guess in a dollar basis, I was just wondering if you could give us the – in terms of the inventory days, what are your inventory days (indiscernible) where your inventory days at the end of the quarter versus last year and versus the prior quarter?

Well, I can speak to it from a churn’s perspective, our churns increase slightly, I believe it was 2.7 and moved up to 2.8, so quarter-over-quarter increased. I would say we were – I am guessing a little bit, (indiscernible) top of my head but we were in that range coming out of last year, maybe even slightly lower than that because we were building inventory in anticipation of increased demand due to the reimbursement change. And so we were starting to add excess inventory at the end of the year. So of the top of my head, I want to say it was 2.5, but I’ll have to follow up with you on that. Mike Matson - Needham & Company LLC: That’s fine, but generally speaking it’s within the range you’ve normally sort of been in?

Mike Matson - Needham & Company LLC: Alright, that’s all I have. Thank you.

Thanks Mike.

Thanks Mike.

(Operator Instructions) Our next question comes from Matt Hewitt with Craig-Hallum Capital

Good morning gentlemen.

Hi Matt

Good morning Matt.

At the Analyst Day, you’d mentioned that you had recently hired someone to help on the regulatory and reimbursement side for international opportunities. I was curious, have you pinpointed a couple of specific countries that you are going to initially target and if so how should we be monitoring or what kind of impact do you expect that to have as we get into FY ’15?

Okay, good question Matt. We’re just really starting our evaluation, we’ve – you may remember that a few years ago when we still were promoting our HydroFix technology, we did get into a few countries with our amniotic tissue, but it was a very small amount of business. So we’re kind of relooking at those relationships. So I can’t give you too many countries just yet, because we’re on that analysis mode. Our real expectation is that this international focus really won’t impact our revenue much until 2016 and beyond. There is a lot of hooks we need to jump through to get into some of these countries, we’ve got to figure out our distribution strategy whether we partner with a larger company or a smaller distributor company or if we even set up our own office, so there’s a lot of things that we need to determine. I think in many cases we will be doing some distribution relationships internationally, but we are a little early to give you the answers you are looking for there, but in 2015, I would not count on any kind of meaningful revenue.

Okay, and then maybe one more from me, obviously you’ve got two phenomenal partners in, Zimmer and Medtronic, have you had discussions? Are you looking for additional partners?

I don’t think we’re ready to comment on that. Matthew Hewitt - Craig-Hallum Okay, fair enough. All right, thanks, thanks again. Great progress, guys.

Okay.

Thanks, Matt.

Thanks, Matt.

(Operator Instructions) Our next question comes from Bruce Jackson with Lake Street Capital.

Hi, if I could follow up with the FDA, so you’ve got the green light to go ahead with the BLA study. What’s the status on the transition letter and when do you think you might have that in hand?

Well we discussed that at the analyst meeting two weeks ago and there is nothing new. We’ve had some communications and let me just kind of reiterate. We’re communicating telephonically. We’ve had meetings and we’re doing our utmost to bring that to conclusion. So we know exactly where we stand and what we’re going to do in terms of the micronized or something similar, product offering and we are having discussions with them and final decisions have not been made. We will keep you very informed when they are reiterating another aspect of that and that is the guidance we’ve given for 2015 and fourth quarter takes into account basically the worst-case scenario for – if it’s micronized product or anything else we are deal with. So we try to be very conservative in terms of what we are giving you and always, of course, meet or exceed those estimates. So I don’t have any news. As soon as we have something that’s – can be definitive. We will get it out to you.

Okay. Then moving over to the gross margins, which were really, really good this quarter, how are you guys set for manufacturing capacity? Do you have enough to take your target through next year and do you have to do anything like expansion or adding shifts to meet that capacity or the targets?

Just a brief reminder, from a facility standpoint between our current facility that we moved into middle of last year and our previous facility, which is still our kind of a backup disaster recovery, as well as excess capacity facility, we have the capacity in both these facilities to have in the neighborhood of 500 million revenue with some increases in efficiencies we might be able to do a little better than that. In order to achieve that, that is assuming a two shift operation. At the moment we are only doing one shift in one location. So I would expect that sometime middle of next year we will either open up a second shift or we will begin processing in our second location on the first shift sometime in the middle of next year in terms of – we have enough facilities. We will have to add a little bit more equipment, but the equipment we have to add is more modular in nature and not that expensive. So we are in a very good shape to position ourselves for our growth next year.

Okay, great. With the DFU studies that have to be published, what’s different about this study compared to the ones that you’ve already published?

We’re all smiling here. We just ask you to wait a couple of weeks here. We will – it’ll be good news, very good news, but we will ask you to wait for a couple of weeks here to so we pass it.

Yeah, I think the only thing I can say is there – I’ve told you that we’ve done consistent results on our studies. I think you will see that and you might see something new too. So we will see.

Something new?

Maybe.

Okay. Then last question on the balance sheet, nice job at the working capital by the way, so you’re building cash right now and you’re going to have quite a lot of it here fairly soon, just philosophically speaking how do you view your capital deployment decision? And how do you balance among investments maybe stepping up the share buyback program or doing acquisitions? And then you do want to get into acquisitions, what are the types of things that you might be looking at?

Okay, well, this is Pete. I’ve probably got more experience in this than anybody in the room, so let me give you our philosophies. Number one, building cash is going to continue to make Mike Senken happy. It seems they never have enough cash. We have plenty of cash. The needs of the company in terms of our internal growth with the five-year strategic plan we’ve talked about is more than sufficient. So the next question is, are we inquisitive? We are inquisitive relative to acquisitions. Well, in my previous organizations, I think, it was a total of 47 acquisitions over the decades. Majority of those were very successful. I think only one was something we had to sell back to the position owners, but anyway we know how to do acquisitions. We are familiar with the process, but at this point, we don’t see technology or other organizations that would fit with what we think is a very solid five-year business plan. If we do, we’ll certainly be aggressive as we run our business activities that way and inquisitive and move, we did that when we acquired Surgical Biologics. At this stage, it’s a good question. It’s something that this management team does not have all the answers for in terms of what are we going to use that cash for, it will continue to build. We’ll see how the board feels about buybacks. It was obvious when we initiated the first buyback program that it was something that should have been done. I can tell you my experience over the years is, most boards don’t like buyback programs, but ours did at least to the point where we brought it to, I mean I agree. So we will have some answers for you, but it’s a nice problem to have and we will develop some strategic and tactical solutions to it. But in the meantime we don’t have the answers you are looking for, I’m afraid.

All right, thank you very much, nice quarter.

Thanks, Bruce.

Thanks, Bruce.

Thanks, Bruce. I appreciate it.

Our next question comes from William Plovanic with Canaccord Genuity.

Hi, great, thanks. Just on the kind of – use the cash kind of topic capital structure, you have a lot of shares outstanding. Any thoughts on a reverse stocks given, I mean, your real company with revenues and profits and growing profits?

We’ve discussed at our board meetings generally every quarter and we’re in a different situation now than we were previously and that’s certainly something that should be considered. Let me just say that, Bill. Previously we were a little concerned about significant to this market cap et cetera et cetera and I’ve done this before very successfully with one of previous companies, but now there is going to be people on any board says, well, the published paper say that when you do a split, market cap goes down toward always been last year because companies have operating problems when they do splits and that’s why everything continues to deteriorate. So it’s a good questions and it’s something that we’d be prudent to do. So we will keep you informed.

Okay and then just looking at the quarter, you go – looking sequentially, you’re really 7.5 million on the top line or 8 million on the top line, you brought almost all of that, about 4 million down to the operating line, so 15% positive drop through, even with hiring reps. As you look at the business going forward and if I run the guidance of 15% next year, I mean, basically you are assuming a little less than that in terms of the 2015 sales and operating margin of at least 15%. Given that your 85%, 90% gross margin product, I mean, do you think that this is something that could actually see positive drop through greater than 50% or should we think about it, I mean, that’s a pretty aggressive number kind of think about it at that level for now?

Well, I’ve tried to be subtle in my comments last few months about operating leverage. When you have an organization and a profit and loss statement, it works like ours, thus we are very, very blessed and fortunate and that operating leverage is going to end up, I think, bringing more than that down, but right now we’ve given 15%. I’ve said, when I had similar question at this company ought to be kind of organization produces 30% of operating profits and I’ve done that with previous companies, but I’ve also can say that it doesn’t always continue to escalate because then you’ve grown into a larger company and then the infrastructure has to increase etcetera, etcetera, but we will be a very powerful organization in going forward and we’ll be filled in cash and we’ll put effort to do it.

Okay and then the last question is – yeah, one of the comments was that depending on the pace of sales hires that could cause some fluctuation in the operating margins on a – on any given quarter. How should we think about – how are you thinking about 2015 in terms of adding your distribution going from that 160 to that 200 number, is that fund loaded in the year, is it kind of equal over the quarters, just how should we think of that cadence for 2015?

Bill, I’d ask you to be patient and let us get our mid-December press release out, we’ll try to give -- have to put that out on the calls and some real details in terms of some of those parameters, but we just are not – haven’t done enough of our homework there and we will before present it to the board of course and we’ll be able to give you I think some insight, so please be patient with us there.

Okay and since I’ve the mike, I’ll ask one more question, which is, the gross margins had a pop from 85% level to 90% from Q1 to Q2 and then Q2 to Q3 stayed – went up a little bit about 70 bps, was there something specific that happened between Q1 and Q2, is that just the mix of the commercial business taken off driving or is something else from manufacturing standpoint, anything that you can kind of point to.

No, it really was the pop on the commercial Wound Care side; direct sales, commercial Wound Care. Again first quarter was a little bit slow in getting started because of all the changes in reimbursement and then second quarter really kicked in especially since we had hired all those sales folks in around the mid to late first quarter. So it really was that as opposed to anything in terms of operationally on the efficiency side.

Great, thank you very much.

Thanks, Bill.

Thank you, Bill. I’ll just end the call by saying, we’ll be talking to you about mid-December as soon as we have our budget approved by our board, filling all those details that you’re seeking and we look forward to talking to you then and stand by. Thank you so much.

Well, ladies and gentlemen, this does conclude today’s presentation. You may now disconnect and have a wonderful day.